White Plains real estate defied gravity for three years. For a while - quite a while - it looked as if the housing recession would pass White Plains by with nary a flicker in the prices. The stock market crash on Wall Street shook the system up and prices have started to come down. Even before the crash, single family homes had started to decline in price. But Coop and condo sales remained stubbornly high. The only major sign of trouble was decreased sales volume, but as long as inventories remained low - with few people selling - higher prices were still tolerated.
Homeowners in New York are up in arms over property taxes. For those who don’t know the region, New Yorkers enjoy just about the highest property tax rate in the country. Westchester has some of the highest taxes in the state - so you get the picture…..In some areas of Westchester, the taxes actually exceed assessed values.
Although we are in the middle of a major housing market correction, many buyers are still in despair over housing prices in Westchester. They hear tales of prices dropping 40-50% in parts of Florida, California and several other former housing hot spots. Earlier, I wrote a blog about the “angry buyer.” Many (but certainly not my buyers) are circling like vultures clinging to the idea that if they are just patient, they can swoop in and steal a house from a desperate seller while he is on his way to bankruptcy court. They want their crash – and they want it bad! Many have been waiting on the sidelines for years hoping that Westchester would have a magic correction of 40-50%.
Although we are in a full blown buyer’s market, many buyers who don’t pull the trigger may well be disappointed in the final result. This is not to say that we are heading towards bull market territory. We are still in a declining market and we won’t know that we are out of it until well after the market has turned. But the last markets to fall in such a correction usually have the least to fall overall. These markets fall towards the end of the cycle because they were more stable to begin with.
The fact is that unlike the stock market, the housing prices and the forces that regulate them are strictly local. It’s a shame that that the media trumpets a national number – as if there was a “national real estate market.” The old saying that real estate is location, location, LOCATION!!! Is very, very true. The national market isn’t relevant to a buyer or seller whose transaction is being determined by LOCAL conditions.
Westchester residents can roll out of bed and onto a train and be in midtown in 30 minutes…
The Manhattan commute is soooooo easy. You just can’t beat that for convenience. Further, White Plains, New Rochelle and Yonkers are often commuter destinations in and of themselves. The ease of the commute is a key component and the geography that makes some areas that are also close to the city a bridge too far or a tunnel too long is another. Several large bodies of water such as the Hudson River and the Long Island Sound create natural “bottlenecks” to what should be an “easy commute” as the crow flies. Ask anyone who has to use the Tappan Zee Bridge how easy their commute is and you will probably get a response that is unrepeatable.
Until we can reincarnate “Scotty” to “beam us up” to the place of our employment, housing prices are going to be levered towards location:
Since people value their time and no one relishes a two hour commute, homes in Westchester that are often 30 minutes or less by train to Manhattan sell at a very high premium - and with good reason. The wear and tear on your car and body are major issues. Let’s not even discuss $4.50/gallon gasoline prices of last summer. These factors make living in these areas far less desirable.
Demand high - available land - not so much:
Housing, like every other market, is governed by supply and demand. In parts of the country where housing prices tanked, building speculators went wild building on every scrap of land available to them. Florida, Nevada, and Arizona went condo-crazy and threw up tons of housing under the premise that if you build it - people will come. In the end, there were just so many people and the builders were left with a ton of inventory.
Westchester was also in heavy demand, but the area was already built up. During the boom our downtowns were built up and luxury condos were overbuilt, but such building opportunities were few and far between for single family homes and more moderately priced condos and cooperative. The result is that the amount of overhanging inventory has been relatively low when compared with places like Florida and Nevada. This wasn’t because builders didn’t want to build, but because they were curtailed by local zoning laws and wetlands.
Builders were shoehorning homes into very unlikely plots wherever they could find a buildable lot:
Anecdotal evidence of the land shortage was obvious throughout the boom. Builders were working on crazy sloped single lots with jutting rocks just to cram in a house. Had there been more large tracts of land available, these tiny, inaccessible parcels wouldn’t have seen so much as one shovel of dirt moved. This shortage has served us well in the decline, because had more land been available, there would have been more empty new homes clogging the inventory.
This is actually GOOD NEWS for the Westchester Buyer:
No, I’m not drinking the Kool Aid. Yes it is good news even though it means buyers can afford less house. Although Westchester consumers are very unlikely to get the fire sale prices that buyers are getting in the hardest hit areas, there is something to be said for the relative resilience and stability of the area. It will cost more to live here, but the wild gyrations of the more volatile areas, while exciting to watch, are not at all fun once you are a home owner. Once buyers are homeowners, they crave stability.
Further Reading:
© 2009 Ruthmarie Hicks - http://thewestchesterview.com All rights reserved.
The Lower Westchester Housing Market - Buyers Market, Not Fire Sale
Tarrytown and Sleepy Hollow have been in the midst of a buyer’s market for some time. This has been particularly true of the single-family home market in the area. The higher tax rates that some of the river towns deal with put this particular market into bearish mode rather early in the correction when compared to other areas of Westchester.
